Motor Fuel Taxes

Currently, New Jersey imposes a 10.5 cents per gallon tax on the sale of gasoline and a 13.5 cents per gallon tax on diesel fuel.
Although the tax is passed directly to the consumer at the retail level, it is actually collected by the Division of Taxation at
the wholesale level from distributors. New Jersey's motor fuel tax rate has consistently ranked in the range of 45th-48th lowest
in the country. The tax was last raised in 1988 by 2.5 cents when it was only 8 cents per gallon for gasoline and 11 cents for diesel.

The motor fuels tax currently raises approximately $540 million annually. The State Constitution dedicates the revenue equivalent of 10.5 cents per gallon from both the gasoline and diesel taxes for transportation capital purposes. The remaining
3 cents of the diesel tax ($25M) is not constitutionally dedicated for transportation purposes but was included as one element of the "heavy truck fees" that are statutorily earmarked for transportation. In fiscal year 2013, the legislature appropriated $540 million of the motor fuels tax to the Transportation Trust Fund.

Historical tax rates and revenues from the Motor Fuel Tax are summarized below:

Fiscal Year

Gas Tax (Cents)

Diesel Tax (Cents)

Statutory Dedication

Constitutional Dedication

Revenues Collected ($Millions)

1927

2.0

2.0

NA

NA

NA

1930

3.0

3.0

NA

NA

NA

1954

4.0

4.0

NA

NA

NA

1958

5.0

5.0

NA

NA

NA

1961

6.0

6.0

NA

NA

NA

1968

7.0

7.0

NA

NA

NA

1972

8.0

8.0

NA

NA

NA

1985

8.0

11.0

2.5

2.5

296.2

1986

8.0

11.0

2.5

2.5

318.2

1987

8.0

11.0

2.5

2.5

321.1

1988

8.0

11.0

2.5

2.5

327.0

1989

10.5

13.5

7.0

2.5

416.7

1990

10.5

13.5

7.0

2.5

404.9

1991

10.5

13.5

7.0

2.5

390.8

1992

10.5

13.5

7.0

2.5

393.6

1993

10.5

13.5

7.0

2.5

411.6

1994

10.5

13.5

7.0

2.5

436.5

1995

10.5

13.5

7.0

2.5

456.9

1996

10.5

13.5

7.0

2.5

448.7

1997

10.5

13.5

7.0

2.5

463.0

1998

10.5

13.5

7.0

7.0

476.1

1999

10.5

13.5

8.0

8.0

483.2

2000

10.5

13.5

9.0

9.0

506.4

2001

10.5

13.5

9.0

9.0

516.4

2002

10.5

13.5

9.0

9.0

523.8

2003

10.5

13.5

9.0

9.0

530.9

2004

10.5

13.5

9.0

9.0

566.8

2005

10.5

13.5

9.0

9.0

547.3

2006

10.5

13.5

9.0

9.0

550.9

2007

10.5

13.5

10.5

10.5

561.9

2008

10.5

13.5

10.5

10.5

563.2

2009

10.5

13.5

10.5

10.5

538.2

2010

10.5

13.5

10.5

10.5

535.3

2011

10.5

13.5

10.5

10.5

524.2

2012

10.5

13.5

10.5

10.5

539.7

2013

10.5

13.5

10.5

10.5

524.6

2014

10.5

13.5

10.5

10.5

530.4

2015 est

10.5

13.5

10.5

10.5

535.0

Petroleum Products Gross Receipts Tax

The Petroleum Products Gross Receipts Tax is imposed on all companies engaged in refining and/or distributing petroleum
products for distribution in New Jersey. It applies to the first sale, not for export, of petroleum products within the state.
The Constitution requires that not less than $200 million annually be dedicated for transportation capital purposes.

The current tax includes a variety of exemptions. Home heating oil (including #2, #4, and #6 heating oils) and propane gas and
kerosene used for residential heating are exempt from tax. Also exempt from tax are receipts from sales of petroleum products
used by marine vessels engaged in interstate or foreign commerce; receipts from sales of aviation fuels used by airplanes in
interstate or foreign commerce other than burnout portion; receipts from sales of asphalt and polymer grade propylene used in
the manufacture of polypropylene; receipts from sales to nonprofit entities qualifying for exemption under the Sales and Use Tax
Act; and receipts from sales to the United States or the State of New Jersey. Effective January 1, 2001, P.L. 2000, C. 156,
phased out, over a three-year period, the Petroleum Products Gross Receipts Tax for fuel used by any utility, co-generation
facility, or wholesale generation facility to generate electricity sold at wholesale or through certain retail channels.

The petroleum products tax is imposed at the rate of 2¾ percent on gross receipts from the first sale of petroleum products in
New Jersey. In the case of fuel oils, aviation fuels, and motor fuels this rate is converted to 4 cents per gallon.

A compensating use tax is also imposed on retail purchases of tangible personal property or certain services made outside
the state for use in New Jersey on which a sales tax would be due but has not been paid.

Article 8, Section 2, Paragraph 4 of the State Constitution dedicates no less than $200 million annually from the Sales and
Use Tax to transportation capital improvement purposes. Although not specified in the constitutional language, the Trust Fund statute identifies sales tax receipts from new vehicle purchases as the sales tax component intended to generate revenues for the Trust Fund.

A variety of products and services are exempt from the tax. Major exemptions include sales of newspapers and magazines; casual
sales except motor vehicles and registered boats; clothing, except furs; farm supplies and equipment; flags of New Jersey and
the United States; unprepared food for off-premises consumption; food sold in school cafeterias; prescription and nonprescription
drugs and other medical aids; motor fuels; periodicals and textbooks; professional and personal services; real estate sales;
tangible personal property used in research and development; transportation of persons or property; production machinery and equipment.

New Jersey's first sales tax became effective on July 1, 1935.
The tax rate was set at 2 percent. P.L. 1935, provided that
sales taxation would cease as of June 13, 1938. Sales and Use
Tax next became effective July 1, 1966. Rate of tax was set
at 3 percent (C. 30, P.L. 1966). Additional exemptions from
the tax were provided by C. 25, P.L. 1967. Chapter 7, PL 1970,
increased the tax rate to 5 percent, effective March 1, 1970.
This Act and C. 25, PL 1970, contained certain transitional
provisions relating to this increased rate. Effective July 1,
1972, sales of alcoholic beverages, except draught beer sold
by the barrel, to any retail licensee. Effective January 3, 1983 (C.227, P.L. 1983) the Sales and Use Tax was increased from 5% to 6% and on July 1, 1990 from 6% to 7% (C.40,P.L. 1990). On July 1, 1992, the rate was decreased back to 6% (C.11, P.L. 1992). Effective July 15, 2006, the Sales and Use Tax rate was increased from 6% to 7% by C.44, P.L. 2006.

Revenues collected from this tax have been as follows:

Sales and Use Tax
(Millions of Dollars)

FY

Revenues
Collected

2000

5,508.0

2001

5,758.7

2002

5,996.8

2003

5,936.1

2004

6,261.7

2005

6,552.2

2006

6853.4

2007

8,609.6

2008

8.915.5

2009

8.264.2

2010

7,879.9

2011

8,126.4

2012

7,935.8

2013

8,235.1

2014

8,169.7

2015 (est)

8,386.7

Good Driver Vehicle Registration Surcharge

During the early 1990s the State of New Jersey collected surcharges on all motor vehicle registrations to help alleviate a
large deficit in the New Jersey Automobile Guarantee Fund. The surcharge rate was $15 on pre-1989 vehicles, $40 on post 1989
vehicles, and $75 on commercial vehicles. The surcharges were originally targeted to sunset in 1997 when they were no longer
needed for automobile insurance purposes.

However, the Transportation Trust Fund Renewal legislation in 1995 revised the statute to gradually reduce the surcharges but
statutorily dedicate the proceeds to the Transportation Trust Fund. The "good driver surcharge" fee is $7.50 on passenger vehicle
registrations and $37.50 on commercial vehicle registrations.

Unlike other revenues which support the Trust Fund, there is no statutory "minimum" dedication associated with "good driver surcharge" revenues. Instead, the statute dedicates such revenues "as needed".

As indicated in the Appropriation Revenues chart above, the Legislature has not appropriated Good Driver revenues to the Authority since FY 2001.

Actual revenues collected from the "good driver surcharge" are as
follows:

Good Driver Registration Surcharge
(Millions of Dollars)

FY

Revenues
Collected

2000

77.8

2001

60.3

2002

62.8

2003

60.3

2004

76.3

2005

81.7

2006

80.9

2007

78.7

2008

75.6

2009

69.8

2010

70.9

2011

72.4

2012

73.9

2013

74.7

2014

76.8

2015 (est)

78.3

Heavy Truck Registration Fees

The 1984 Transportation Trust Fund Legislation included the imposition of new fees on trucks weighing more than 18,000 pounds.
The truck fees included three components.

The first was an increase in the registration fees for all trucks registered in New Jersey and weighing more than 18,000 lbs.

The second was a decal fee that was to be imposed on all New Jersey registered and out of state registered trucks subject to the
State's Motor Fuel Use Tax.

The third component was a 3 cent "diesel differential" on the motor fuels tax, which raised the diesel fuel tax from 8 to 11 cents
per gallon. The Trust Fund statute dedicated the revenues from these fees, but not less than $30 million, to the Trust Fund.

As indicated in the Appropriation Revenues chart above, the Legislature has not appropriated Heavy Truck registration fees to the Authority since FY 2001.

Actual revenue yield from this package of fees is unknown. The Motor Vehicle Commission does not track and report on the impact of
rate increases in specified weight categories from the 1985 Legislation. The decal fee was eventually ruled unconstitutional. The
diesel differential is still collected and is estimated to yield approximately $24.5 million.
Toll Road Contributions

The 1984 Transportation Trust Fund legislation included a requirement that the three highway toll road authorities enter into a
contract with the State Treasurer to contribute $24.5 million annually for state transportation capital purposes. Of that amount,
the New Jersey Turnpike Authority was to contribute $12 million annually, the New Jersey Highway Authority (Garden State Parkway)
$10 million annually and the South Jersey Transportation Authority $2.5 million annually.

The New Jersey Turnpike Authority subsequently merged with the New Jersey Highway Authority and became responsible for one $22 million
annual payment. While the contribution rate for the authorities has not changed since 1985, the $22 million Turnpike contribution
was forgiven by the State Treasurer for FY 2005 and FY 2006 in order to facilitate advancement of the critical high-cost Driscoll
Bridge Replacement project.
For FY 2007, the New Jersey Turnpike contributed an additional $27.5 million to the State or a total of $49.5. Combined with the SJTA contribution of $2.5 million, a total of $52 million was contributed by the toll road authorities. Of that amount, $12 million was appropriated to the NJTTFA and the remaining $40 million for NJDOT operations and maintenance. This $12 million is still appropriated to the NJTTFA through FY 2013.

Beginning in FY 2012, a separate agreement was established with the NJ Turnpike Authority to provide for additional contributions of pay-as-you-go funding to the Authority. In FY 2012, $66 million was provided. There were no additional contributions in FY 2013 and FY 2014.